Forecasts and Financial Presentation
Green Business Plan Forecasts and Financial Presentation
Forecasts or projections are the steak to the green business plan’s sizzle. As one of the most important part of the green business plan from the investor’s perspective, the forecast usually makes or breaks the deal. Forecasts can be even more important in a green business plan, since the eco-business may to be breaking new ground in the marketplace.
It is imperative that am energy business plan or green business plan present the financial data correctly. The executive summary of the plan itself can often contain a summary forecast, providing the investor with a capsule view of income and expenditures. The main body of the plan should have detailed information about how income will be used, extended narrative about the forecasts, and supportive sections discussing the marketing budget and providing market penetration analysis. The appendixes should contain all detailed forecasts.
The types of forecasts that most lenders, investors, and grant sources expect to see in a green business plan are:
- Annual Forecasts, typically covering five years
- Month to Month Forecasts, which are completed on an accrual month-to-month basis to establish cashflow requirements and project when the company—whether a start-up or expanding company—reaches the break-even point. Usually, One Year on a Month to Month basis is sufficient, although Web plans usually need two years.
- Both the annual summary forecasts and detailed forecasts need footnotes in a separate worksheet that support virtually all income and expense assumptions. A lender should never have to guess at the source of an assumption.
- Cashflow analysis, which may be either a substitute for or provided in addition month to month basis. The cash flow analysis provides accrual data and takes into account particulars such as the timing of receipt of accounts receivables.
- Sources and Uses of Funds, which is a one- to two-page worksheet that is included the financial projections.
- Marketing & promotion budget, which is a critical and substantive portion of the forecast. This is the line item that that a green entrepreneur most often underestimates, and one about which investors are keenly interested. Therefore, the marketing & promoting budget is often presented in a standalone worksheet, supported by documentation in Uses of Funds, and referenced at length within the narrative of the business plan.
- Schedules and charts for key assumptions apply to specific projections, like market penetration or cost of products. They need to stand alone in the forecasts and/or business plan.
Where most plans come up short
Green business plans often fail in their objective to raise capital because (1) the forecast is viewed as insufficient, incomplete, or unprofessional; and/or (2) lacks detailed notes and supporting information, on which assumptions of revenue and expenses are based.
Clients intent on developing their own green business plans often ask us to complete the forecasts and related exhibits only. When we receive what a client considers to be a tight and concise plan, we focus on preparing the forecast and related portion. The forecast is often inserted in the plan in summary format, with detailed forecasts, Sources and Uses of Funds, and other customized financial analysis features included as attachments.
The exhibits contain financial spreadsheets that are interconnected by formulas. For example, a spreadsheet showing cumulative cash flow by month may contain a marker showing when the business break-even point is reached, which then is tied to a line item in the Uses of Funds schedule reporting this fact.
Finally, many private or angel investors think more in words than in numbers, and your executive summary and green business plan need concise narrative that reverts back to forecasts and uses. Developing a synergy between words and numbers is a matter at which Senior Consulting, LLC excels. We know the “what, when, where, why and how” of green business plan writing and understand how to structure a plan to meet your needs and goals.